Other Special Laws

Financial Rehabilitation and Insolvency Act (FRIA of 2010)

Remedies for Individual Debtors who are NOT Businessmen:

Suspension of Payment (TA > TL)
Effect of issuance by court of an Filing of
Order: Petition
 No creditor shall sue or collect
claim except
o Creditors with claims for Action by
personal labor the Court
o Fully secured creditors

Meeting Debor cannot Publicati

Duration of Suspension: 3 months
of sell or transfer on of
properties
Meeting of Creditors:
Creditors Order
Approved: court shall order that all parties
Quorum: 3/5 of the Liabilities
are bound. Other orders necessary may be
Approval of Proposal (Double Majority)
enforced
 2/3 of the creditors voting Failure: All rights creditor rights are
 Claims represented by said
 majority amounts to at least 3/5 of
total liability
No creditor who incurred his credit
within 90 days prior to filing shall be
entitled to vote
Liquidation of Individual Debtor (TL > TA)
Voluntary
Debtor owing debts EXCEEDING
₱500,000
 May apply to be discharged from
debts by filing a verified petition
with the court of the province or
city
 If the court finds the petition
sufficient in form and substance, it
shall WITHING 5 WORKING DAYS,
issue liquidation order
Requirements:
revested. Debtor may be made subject to
liquidation.
Involuntary
Creditor/s with claims AT LEAST
₱500,000
 Acts of insolvency must be alleged
by the creditors in the petition
 Posting of bond by creditors
o If debtor not insolvent, creditors
are liable
Orders the court may issue during IL
 Court shall issue Show Cause
Order
 Forbid debtor from making
1. Total Liabilities > Total Assets payments.
2. Debts exceed ₱500K o No order may impair the rights of
secured creditor

Remedies for Insolvent Businessmen

Rehabilitation
Court-supervised Pre-negotiated Out-of-Court
Restructuring
 Voluntary  Pre-negotiated by the  Allowed as long as the
 Involuntary – claims AT debtor and its creditors requisites of FRIA are
LEAST ₱1,000,000 present

Voluntary Court Involuntary Court

Supervised
 Required vote
o Majority of partners
(Partnership)
o Majority of BOD and
2/3 Stockholders
Supervised
 Required vote (higher)
o Creditor claims of AT
LEAST ₱1,000,000 or
o 25% of subscribed
capital stock or
 (Corporation) partner’s contribution
Petition for
o 2/3 of members Rehabilitation
establish the insolvency of
(Nonstock)  Grounds debtor and viability of
rehabilitation
o No issue with
 Grounds creditors’ claims. The
o Debtor unable to pay claim is due and Commencement
If sufficient
Orderin form and
o Total liabilities > total demandable, and substance, a CO shall be
issued within 5 days
assets payments have not
been made for AT
 Minimum Allegations LEAST 60 days
o Establish the o A creditor, other than Receivership
A qualified natural or juridical
person may serve as receiver.
insolvency petitioners, has Can be appointed or
nominated.
o Establish viability of initiated foreclosure
rehabilitation proceedings
Conservatorship
Elected liquidator by creditors
or court-appointed
 Banking Laws
Philippine Deposit Insurance Law (RA 3591)
Insurable Deposits Not Covered by PDIC
 Savings deposits  NOW  Investment products (bonds, securities)
 Special savings  Time Deposits  Deposits that are fraudulent, emanate from
 Demand/Checking  FC Deposit unsafe/unsound practices and unlawful
proceeds

Required to File Insurance Claim (w/i 2 years) Other Procedures

 Accounts with deposits more than 100,000
 Those with outstanding obligations
 Those without updated addresses
 Those who maintain their accounts under
the name of business entities
 Account not eligible for early payment
Period of payment – as soon as possible
Mode of payment – cash or money order
Requirement before payment – proof of claims
or, if not satisfied, final determination of court
Period of payment – within 6 months from
filing
PDIC will be legally subrogated to all rights.

General Banking Law Bank Secrecy Law

Banks – lending of funds in the form of Instances of Violations
deposits  Public prosecutor handling estafa case
Quasi-banks – borrowing of funds through  BIR officer auditing the VAT of accused
acceptance of substitute deposits  Credit investigator of lending institution
Single Borrower’s Limit – 20% of Net Worth of
Bank and may be increased by an additional
10%
 the current rate was raised to 25% in
2004.
 Batas Pambansa 22 (Bouncing
Check Law)
 Penalty
o imprisonment of not less than 30 days
but not more than 1 year or
o fine of not less than, but not more than
twice the amount of the check, in no
case shall exceed ₱200,000 or
o both imprisonment and fine
 Quantum of Evidence
o To convict: proof beyond reasonable
doubt
o To prove civil damages: preponderance
of evidence
o To sue: prima facie/probable cause
Anti-Money Laundering Council
Covered Transactions
 Cash or other equivalent exceeding 500K
 Transaction exceeding 1M for jewelry
dealers
 Casino Cash transaction of excess of 5M
 Real estate transactions exceeding 500K
Record keepings – 5 years
Transaction reporting – within 5 working days
unless AMLC prescribes a different period not
exceeding 15 days
Suspicious Transactions – not more than 10
calendar days to determine